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Brussels Brief - December 8, 2006

In Depth

Trade: Commission Launches Public Consultation on European Trade Defence Instruments

James Arneill

The European Commission has adopted a Green Paper which launches a public consultation process on the effectiveness of EU Trade Defence Instruments, in the context of the changing global economy. The process forms part of the Commission’s new global strategy for European competitiveness. Key issues raised by the paper include: whether further account should be taken of outsourcing of production by European businesses (who then import into the EU); the criteria for (i) launching investigations, (ii) determining dumping and (iii) evaluating the level of duties; improvement of transparency in the trade defence process; and whether there are any particular obstacles to small businesses participating in investigations. The consultation period will last until the end of March 2007.

The European Commission has proposed a phasing out of capital duty in two steps, in order to support the development of EU companies. Capital duty is an indirect tax levied on contributions of capital, but the trend has been towards an elimination of capital duty in most Member States. Today, seven of the 25 Member States (Greece, Spain, Cyprus, Luxembourg, Austria, Poland and Portugal) continue to levy capital duty. The abolition of capital duty is in line with the EU strategy to create more jobs and growth. It proposes a limit of 0.5 per cent on the rate of capital duty by 2008 and a total phasing out of capital duty by 2010.

Air Transport: US Fails to Comply With Open Skies Agreement

Philip Torbøl

The US Secretary of Transport, Mary Peters, has decided to withdraw a controversial proposal to relax US rules on foreign ownership of its airlines. The current rule allows foreign investors to control only 25 per cent of the voting rights in US-based airlines. The proposal would have ensured EU investors a treatment equivalent to that given to US investors in the EU, where the limit is 49 per cent. The US administration had committed to make this change as part of the EU-US Open Skies Agreement. EU and US officials will meet in January to assess the situation.

The European Court of Justice (ECJ) has ruled, following a referral from the Italian Courts, that legislation prohibiting derogation from minimum lawyers’ fees constitutes a restriction on the freedom to provide services. In Italy, the scale of lawyers’ fees, proposed by the National Lawyers’ Council and approved by the Minister of Justice, sets maximum and minimum fees for each procedural step. Any agreement derogating from the minimum fees is void. Only a court can exceptionally set the fees beyond these limits. According to the ECJ this rule renders access to the Italian legal services market more difficult for lawyers established outside Italy. The ECJ does not rule out that the limits can be justified for reasons of consumer protection and the proper administration of justice. However, these exceptions should be proportional to the objective pursued, which is to be assessed on the basis of the facts of each case.

Competition: CFI Upholds Cartel Fine in Dutch Gases Case

Yannis Virvilis

The Court of First Instance (CFI) has dismissed the appeal brought by the Dutch company Westfalen against a Commission decision of 2002, imposing on the company a fine of EUR 0.41 million for participating in a cartel in Dutch industrial and medical gases. In that decision, the Commission fined seven companies a total of EUR 26 million for participating in a cartel in which price increases and other trading conditions were discussed and fixed. Westfalen argued that the evidence on which the Commission based its findings were inconclusive, and that the fine imposed on it was discriminatory and disproportionate. The CFI, confirming the Commission’s discretionary powers in cartel cases, dismissed all claims put forward by the appellant.

During the visit to the European Commission of Kazakh President Noursoultan Nazarbaev, the EU and the Republic of Kazakhstan have signed a Memorandum of Understanding (MoU) that establishes a framework for enhanced energy security and industrial cooperation. Kazakhstan is one of the most important energy players in the Caspian region, with oil reserves estimated at nine billion barrels and natural gas reserves estimated at almost two trillion cubic metres. Kazakhstan also holds approximately 20 per cent of the world’s known reserves of uranium.

The MoU concerns in particular the regular exchange of information on respective energy polices, cooperation on energy transportation infrastructure and the development of environmentally clean technologies. Similar MoUs have already been signed between the EU and other countries such as Azerbaijan and Ukraine. A MoU with Algeria is currently at an advanced stage of negotiation.

The European Commission has cleared a proposed joint venture between Fiat Auto (Fiat) and French bank Crédit Agricole SA. Fiat produces cars worldwide under the Fiat, Lancia and Alfa Romeo brands, while Crédit Agricole is a worldwide provider of banking, financial, and insurance services. The parties intend to create a joint venture by acquiring joint control over Fidis Retail, an Italian provider of consumer financing for car purchases, and subsequently transferring Fiat’s car purchase finance operations to the joint venture.

The Commission’s analysis of the proposed venture focused mainly on potential horizontal concerns in Greek and French markets, and vertical market concerns in Italy. The Commission concluded that the transaction was unlikely to impede competition because (i) the parties have a limited overlap in Greece and France, where there are also a number of other strong competitors; (ii) Fiat, in Italy, had pre-existing vertical relationships with the entities comprising the joint venture; and (iii) Crédit Agricole has a marginal presence in the Italian market.

Trade: European Commission Accepts New Import Arrangements for New Zealand Butter

Michal Cieplinski

The European Commission has proposed new arrangements for imports of butter from New Zealand, following a judgment of the European Court of Justice. In a case brought by a German dairy company, the European Court ruled that the existing arrangements were discriminatory, as import licences for New Zealand butter were only issued to subsidiaries of the Fonterra company, which enjoys an export monopoly in New Zealand. The new regime will attribute 55 per cent of import licences to traditional importers of New Zealand butter and 45 per cent to newcomers. The European Commission also decided to reduce the tariff for New Zealand butter imported under quota from the current rate of EUR 86.88 per 100 kg to EUR 70 per 100 kg. The proposed change in the tariff must still be approved by the Council.

Air Transport: Commission Harmonises Air Navigation Service Charges

Elena Kostadinova

The European Commission has adopted a Regulation on a common charging scheme for air navigation services, effective as of 1 January 2007. The Regulation concerns the financing of air navigation services (guidance from an air traffic controller to a pilot) and is based on the Eurocontrol multilateral agreement. Air navigation services are of public interest and therefore not subject to normal market forces of supply and demand. This is due to the fact that, in principle, airlines follow fixed routes and cannot choose which Member States' airspaces they cross. The adoption of the Regulation will be followed by a proposal for a Directive on airport charges, forming part of the so-called "airport package".

NEXT WEEK’S EVENTS

Monday 11 December – Friday 15 December 2006

COUNCIL MEETINGS

Transport, Telecommunications and Energy Council (11 – 12 December 2006)

General Affairs and External Relations Council (GAERC) (11 – 12 December 2006)

European Council (14 – 15 December 2006)

COURT OF JUSTICE

Judgments

Approximation of laws

C-380/03 Germany v Parliament and Council

Area of Freedom, Security and Justice

C-283/05 ASML

Competition

C-217/05 Confederación Española de Empresarios de Estaciones de Servicio